Erie Doctrine

MBEMax wiki article — paired with the Civil Procedure question set on mbemax.com.

One-line summary

In diversity cases, federal courts apply state substantive law and federal procedural law — but the hard work is sorting which is which, using a framework that evolved from Erie through Hanna and Shady Grove.

Mnemonic

E-H-S — Erie (state substantive law), Hanna (Federal Rules trump if on point), Shady Grove (modern test structure).

Or: REAR-H — Rule of Decision Act, Erie choice, Activity rules (hard), Rules of Practice and Procedure, Hanna framework.

The Erie problem

Before 1938, federal courts in diversity followed Swift v. Tyson's general common law. Erie Railroad v. Tompkins, 304 U.S. 64 (1938), held that the Rules of Decision Act requires federal courts in diversity to apply state substantive law. Procedural matters are still governed by federal law.

Sorting tests — the four scenarios

Scenario 1: Federal statute directly on point

Apply federal statute if (a) it is constitutional and (b) it actually addresses the issue. State law yields.

Scenario 2: Federal Rule of Civil Procedure on point (Hanna v. Plumer)

Hanna v. Plumer, 380 U.S. 460 (1965): Federal Rule applies if (a) within scope of Rules Enabling Act (28 U.S.C. § 2072 — "rules of practice and procedure"), (b) arguably procedural, and (c) does not abridge, enlarge, or modify substantive right.

State law yields. Don't run outcome-determinative analysis when FRCP is on point.

Scenario 3: Federal judge-made practice (no statute, no rule on point)

Run the outcome-determinative + twin aims of Erie + balancing tests:

• Outcome-determinative (York) — would applying federal law vs. state law significantly affect the outcome?
• Twin aims of Erie (Hanna dictum) — (1) discourage forum shopping between state and federal court, (2) avoid inequitable administration of laws.
• Balance of federal interests (Byrd) — strong federal policy may outweigh even outcome-determinative state rule.

Scenario 4: Shady Grove — modern application

Shady Grove Orthopedic Associates v. Allstate Insurance, 559 U.S. 393 (2010): When state rule and Federal Rule appear to overlap, the FRCP wins if it regulates procedure. Justice Scalia's plurality emphasized scope of Rule. Justice Stevens concurred on narrower grounds (FRCP can yield if state rule defines substantive right; must examine state rule's substantive purpose).

Practically: most FRCP questions get answered under Hanna plus Stevens's concurrence.

Classic Erie applications

• Statute of limitations — state (Guaranty Trust v. York).
• Choice of law / conflict rules — state (Klaxon).
• Medical-malpractice pre-suit requirements — state.
• Tolling rules — state.
• Punitive-damages caps / remittitur standards — state substantive (Gasperini).
• Standing and Article III limits — federal.
• Burden of proof on issues of state-law substance — state.
• Rule 23 class-certification standards — federal (Shady Grove).
• Pleading standards — Twombly / Iqbal plausibility — federal.
• Rule 4 service of process — federal.

Reverse-Erie

When state courts hear federal claims, state procedure generally governs, but federal claims must be given full and fair adjudication — state procedural rules cannot unreasonably burden federal right.

NCBE loves to test

• Start with Rules Enabling Act. If FRCP is on point and valid, it applies. Skip York analysis.
• Substantive vs. procedural. State statutes of limitation — substantive. Tolling — substantive. Pleading plausibility — procedural.
• Twin aims. Forum shopping + inequitable administration. Ask: would applying federal law encourage plaintiffs to choose federal court?
• Byrd balancing. When strong federal interest (right to jury trial under Seventh Amendment) conflicts with state rule.
• Klaxon. Federal court in diversity must apply choice-of-law rules of the state where it sits. Then applies substantive law indicated by state choice-of-law rules.
• Gasperini. Punitive-damage review standards and new-trial standards — substantive.
• 28 U.S.C. § 1652. Rules of Decision Act.
• § 1404 transfer. State choice-of-law follows the case.

Fast hypos

Hypo 1. Diversity case in federal court. State tort claim. Plaintiff sues one day after state two-year SOL expires. Dismiss — SOL is substantive under Erie.

Hypo 2. Federal court certifies class action under FRCP 23. State law precludes class actions for this type of claim. FRCP 23 on point; *Shady Grove — federal rule applies.*

Hypo 3. State requires expert affidavit at the complaint stage for medical-malpractice cases. Federal court in diversity. Substantive prerequisite — apply state rule in most circuits.

Hypo 4. State requires service of process by sheriff; federal Rule 4 permits any adult. Rule 4 on point + valid; federal rule applies (Hanna).

Hypo 5. State law caps punitive damages at $500,000. Federal court in diversity. Substantive — apply state cap.

Case anchors

• Erie Railroad v. Tompkins, 304 U.S. 64 (1938) — federal courts in diversity apply state substantive law.
• Guaranty Trust Co. v. York, 326 U.S. 99 (1945) — outcome-determinative test.
• Byrd v. Blue Ridge Rural Electric Cooperative, 356 U.S. 525 (1958) — federal interest balancing.
• Hanna v. Plumer, 380 U.S. 460 (1965) — FRCP framework; twin aims dictum.
• Klaxon Co. v. Stentor Electric Manufacturing, 313 U.S. 487 (1941) — state choice-of-law rules apply.
• Gasperini v. Center for Humanities, 518 U.S. 415 (1996) — state remittitur standard applied.
• Shady Grove Orthopedic Associates v. Allstate Insurance, 559 U.S. 393 (2010) — modern FRCP vs. state law analysis.
• Swift v. Tyson, 41 U.S. (16 Pet.) 1 (1842) — overruled by Erie.

See also

• Subject-Matter Jurisdiction — Diversity
• Subject-Matter Jurisdiction — Federal Question
• Venue
• Summary Judgment

Sources

28 U.S.C. §§ 1652, 2072, 1404; Rules of Decision Act; Erie Railroad v. Tompkins, 304 U.S. 64 (1938); Guaranty Trust Co. v. York, 326 U.S. 99 (1945); Byrd v. Blue Ridge Rural Electric Cooperative, 356 U.S. 525 (1958); Hanna v. Plumer, 380 U.S. 460 (1965); Klaxon Co. v. Stentor Electric Manufacturing, 313 U.S. 487 (1941); Gasperini v. Center for Humanities, 518 U.S. 415 (1996); Shady Grove Orthopedic Associates v. Allstate Insurance, 559 U.S. 393 (2010).